TCS wins outsourcing contract worth more than $2 billion
BENGALURU: Tata Consultancy Services Ltd (TCS) has won its largest information technology (IT) outsourcing deal with an over $2-billion, 10-year contract from a unit of Dutch insurer Aegon NV, assuring India’s largest IT company the fastest revenue growth in three years in 2018-19.
The contract from Transamerica Life Insurance Co. is the second large outsourcing deal won by TCS in the past month, and bigger than the $2.25 billion deal announced when it renewed a partnership with television ratings measurement company Nielsen in December. TCS did not specify the exact value of the contract, but said it was worth more than the Nielsen deal.
TCS’S ability to win such multi-billion-dollar deals should help put an end to its protracted underperformance. TCS reported a 1.3% sequential increase in revenue in constant currency terms (which eliminate the effects of exchange rate fluctuations) during the October-december period, marking the 13th straight quarter that TCS either underperformed or at best managed to match analysts’ estimates.
Significantly, these large deal wins will assuage any investor concerns over TCS’S decision to elevate chief financial officer Rajesh Gopinathan to the chief executive officer’s mantle in February 2017, replacing N Chandrasekaran, who was appointed chairman of Tata Sons Ltd, the group holding company.
Mumbai-based TCS won the Transamerica contract in competition with at least three other global outsourcing companies, including Cognizant Technology Solutions Corp., according to a TCS executive who spoke on condition of anonymity.
Under the Transamerica-tcs contract, the deal value will be unevenly spread over the decadelong contract period. This means that TCS, which is expected to end this fiscal year with over $19 billion in revenue, should improve its annual growth rate by at least 1 percentage point in the next fiscal year. This is because TCS stands to make over $200 million in business in the first year from this partnership. TCS needs to add $1.9 billion in new business to clock 10% revenue growth.
“TCS will simplify the service of more than 10 million policies into a single integrated modern platform, and drive greater sustainable growth opportunities through superior customer experiences,” said a statement from Transamerica.
As part of this deal, 2,200 employees of Transamerica will join TCS.
“The Transamerica deal is TCS’S biggest deal till date, bigger than the Nielsen deal. Remember, deals like this do not only happen because we have a platform,” TCS chief operating officer N Ganapathy Subramaniam told Mint on Friday. “The combined expertise of TCS, of almost every capability of the organization, has come together to help us. And we are extremely proud of what we have achieved.”
“We have invested heavily in our insurance digital platform, TCS BANCS, and our extensive US capabilities, and are proud to partner with Transamerica in its ongoing transformation and welcome the transitioning employees to promising new careers at TCS,” said CEO Gopinathan. NEW DELHI: HT Media Ltd, publisher of the Hindustan Times and Mint newspapers, on Friday reported a 36% increase in December quarter net profit, helped by a decline in raw material costs as well as other expenses.
Net profit rose to ₹124.3 crore in the fiscal third quarter from ₹91.3 crore in the year-earlier period. Revenue declined marginally by 2.19% to ₹689.3 crore from ₹704.7 crore, said the company, which also operates two FM radio stations, Fever 104 and Radio Nasha.
Advertising revenue in the print segment dropped 3% to ₹452 crore. Circulation revenue fell 14% to ₹68 crore.
The fall in advertising revenue was offset by a 5.9% decline in raw material and inventory costs to ₹168.3 crore from ₹178.9 crore.
Employee costs declined 10.2% to ₹129.9 crore. Other expenses fell 14.1% to ₹185.1 crore.
Earnings before interest, taxes, depreciation and amortisation (Ebitda), a key indicator of operating profitability, rose 20.4% from a year earlier to ₹199.1 crore from ₹165.3 crore a year ago.
Revenue at Fever 104, which operates four stations in Delhi, Mumbai, Kolkata and Bengaluru, increased 5% to ₹47 crore.
Digital revenue at HT Media, which operates the jobs website Shine.com, declined by 24% to ₹28 crore in the three months ended December.
“The pressure on revenue has continued in our print business. While our English business has declined marginally, our Hindi business has reported growth. The cost rationalisation initiative we undertook last year continues to deliver good results with benefits visible across all cost items,” said HT Media chairperson and editorial director Shobhana Bhartia.
“Our radio business continues to grow, albeit in the single digits, but amidst an industry wide slowdown. Both our new and existing radio stations posted revenue growth even as profit margins in the business continue to improve.there are some signs of an upcoming recovery as evidenced by advertising revenue picking up in the second half of the quarter. With the teething issues around GST (goods and services tax) resolved, we expect growth in the coming financial year,” she added.